U.S.-Saudi Arabia Memorandum of Consultations on Expansion of Civil Aviation Rights of April 15, 1992

On April 14-15, 1992, delegations representing the UnitedStates of America and the Kingdom of Saudi Arabia met inWashington, as earlier agreed, to discuss civil aviationissues . Delegation lists appear at Attachment A .

The two delegations agreed, on an ad referendum basis, torecommend to their governments certain revisions to an AirTransport Agreement that was initialed by U .S. and Saudi aviation delegations on January 9, 1990 . A revised Article 19 of the Agreement appears at Attachment B ; a revised Annex 1appears at Attachment C ; and a revised Annex 2 appears at Attachment D . The two delegations expressed the continuingintention of their governments to apply the provisions of theAgreement on the basis of comity and reciprocity prior to theentry into force of the Agreement .

In addition to the expansion of rights provided for inAnnex 1 above, the two delegations agreed that, if marketdemand for scheduled services would support services inaddition to those specified in the Agreement, their governmentswould promptly exchange views on expanding rights to operatesuch services .

During the discussions, the U .S. delegation proposedlanguage for a new article covering intermodal transport . The Saudi delegation received the proposal with interest, but notedthat such matters were not within its jurisdiction . The Saudi delegation offered to transmit the proposal to the appropriateauthorities in the Saudi Arabian Government for further consideration. The U.S. delegation undertook to providefurther information about its proposal to facilitate Saudiconsideration .

The two delegations also discussed the long-standingapplications for licenses to provide non-postal expressdoor-to-door delivery services, submitted by the Saudi agentsof the U .S . companies, Airborne Express and Federal Express,still pending before the Saudi Arabian authorities . The U .S . delegation requested the Saudi delegation's assistance inobtaining approval of these applications on a timely basis . The Saudi delegation expressed optimism about approval of thoselicenses and offered to make representations to appropriateSaudi Arabian authorities .

On the subject of charter operations, the Saudi delegationreaffirmed that U .S . carriers would not be charged no-objectionfees for charter operations between the United States and Saudi Arabia . In addition, the Saudi delegation stated that it would recommend to its authorities the waiver of royalty fees for Hajcharters from the United States to Saudi Arabia .

The two delegations made further progress in reconcilingthe English and Arabic language texts of the Air TransportAgreement that was initialed on January 9, 1990 . The Saudi delegation undertook to incorporate the final changes in theArabic language text and transmit that document to the UnitedStates for a final comparison . Both delegations expressed thestrong hope that a final agreement could be signed in the verynear future .

This Agreement shall enter into force on the date of signature . In witness whereof, the undersigned, duly authorized thereto by their respective Governments, have signed the present Agreement . Done in duplicate at on this day of in the English and Arabic languages, each version being equally authentic . For the Government of For the Government of The United States of America the Kingdom of Saudi Arabia

Attachment C

ANNEX1

Scheduled Air Services

Section I- Routes (1) The airline or airlines of each Contracting Partydesignated under this Annex shall, in accordance with the terms of their designation, be entitled to perform scheduled international air transportation (1) between points on the following routes, and (2) between points on such routes and points in third countries through points in the territory of the Contracting Party which has designated the airlines .

A . Routes for the airline or airlines designated by the Government of the United States : (i) For passenger and cargo combination service: From a point or points in the United States via two (2) intermediate points to Jeddah, Riyadh, and Dhahranand beyond Saudi Arabia to two points in Asia .

(ii) For all-cargo service : From a point or points in the United States, via two intermediate points to Jeddah, Riyadh, and Dhahran and beyond Saudi Arabia to two points in Asia, Australia and New Zealand .

B . Routesfor the airline or airlines designated by the Government of the Kingdom of Saudi Arabia : (i) For passenger and cargo combination service: From a point or points in the Kingdom of Saudi Arabia, via two intermediate points to New York, Washington, Orlando and two additional U.S. points 1/, and beyond the United States to two points in the Western Hemisphere (Canada, Mexico and South America) . ]/ The additional U .S . points may be changed on three months' prior written notice transmitted through diplomatic channels .

(ii) For all-cargo service : From a point or points in the Kingdom of Saudi Arabia, via two intermediate points to New York and three additional U.S. points 1/, and beyond the United States to two points in the Western Hemisphere (Canada, Mexico and South America) . (2) Notes to the routes: (A) Each Contracting Party may change its intermediate orbeyond points on three months' prior written notice transmitted through diplomatic channels . (B) The designated airlines of each Contracting Party mayserve any intermediate or beyond point without geographic limitation on a blind sector basis . l/ The Kingdom of Saudi Arabia may select one fixed point for scheduled all-cargo services in the United States and two additional points which may be changed on ninety days' notice through diplomatic channels . The designation of a point shall be made ninety days before commencement of operations .(C) In addition to the intermediate and beyond points on the routes in paragraph (1) above, the designated airlines of one Contracting Party may serve any intermediate or beyond point without geographic limitation with full traffic rights so long as the designated airlines of the other Contracting Party are not independently or jointly serving these points . (D) Intermediate points may be used as beyond points andbeyond points may be used as intermediate points . (E) Each Contracting Party's airlines may serve the pointsin the other Contracting Party's territory on a coterminal basis . (F) Exchanges of views regarding future developments: (i) The Contracting Parties agree to exchange viewsprior to April 1, 1994 regarding whether expansion of scheduled air transport services is justified by market conditions . (ii) Such exchanges shall consider, as a minimum,(a) increasing scheduled combination services for bothContracting Parties from eight (8) to ten (10) weekly round-trip frequencies ; (b) increasing scheduled all-cargo services for both Contracting Parties from six (6) to eight (8) weekly round-trip frequencies . (3) Each designated airline may provide all or part of itsservice through a voluntary blocked-space arrangement with a designated airline of the other Contracting Party, after first obtaining the approval of the aeronautical authorities of both Contracting Parties . (4) Each designated airline, may on any or all flights and atits option, operate flights in either or both directions and without directional or geographic limitation, serve points on the routes in any order, and omit stops at any point or points outside the territory of the Contracting Party which has designated that airline without loss of any right to carry traffic otherwise permissible under this Agreement . (5) On any international segment or segments of the routesabove (and as may be later agreed upon by the Contracting Parties), a designated airline may perform international air transportation without any limitation as to change, at any point on the route, in type or number of aircraft operated, provided that in the outbound direction, the transportation beyond such point is a continuation of the transportation from the territory of the Contracting Party which has designated the airline, and in the inbound direction, the transportation to the territory of the Contracting Party which has designated the airline is a continuation of the transportation beyond such point .

Section II- Designation

Notwithstanding the provisions of Article 3 (Designation and Authorization) of this Agreement, each Contracting Party may designate no more than two (2) airlines to perform scheduled combination (passengers, cargo and mail) services and may designate no more than two (2) airlines to perform scheduled all-cargo (property and mail) services .

Section III-Number of Flights

Notwithstanding the provisions of Article 10 (Capacity Provisions) of this Agreement : (1) The designated combination airlines of eachContracting Party may operate no more than eight (8) round-trip frequencies per week for combination services over the routes specified in Section I of this Annex .

(2) The designated all-cargo airlines of each Contracting Party may operate no more than six (6) round-trip frequencies per week for all-cargo services over the routes specified in Section I of this Annex. SectionIV- Termination (1) The provisions of this Annex will expire on March 31, 1995 . The Contracting Parties agree to exchange views at least six months in advance of that expiration date to determine whether the provisions of the Annex should be continued or modified . Discussions shall include an analysis of current service levels, historic growth in the market, the type of services being provided and the potential for development of new services . (2) This Section does not modify any other provision of the Agreement regarding consultations, suspension, or termination of the Agreement .

Attachment D

ANNEX2

Charter Air Services

(1) The airline or airlines of each Contracting Partydesignated under this Annex shall be permitted to operate single entity passenger charters between the United States and the Kingdom of Saudi Arabia . (2) The airline or airlines of each Contracting Party shall bepermitted to operate cargo charter flights between the United States and the Kingdom of Saudi Arabia after receiving approval of their applications for such services . The airline or airlines of the Kingdom of Saudi Arabia may operate cargo charters through a lease arrangement with an airline of a third country, subject to prior approval of the aeronautical authorities of both Contracting Parties . (3) Except as otherwise agreed, such charters as permittedunder this Annex will be performed in accordance with the rules and regulations of the country where the charter originates . In addition, the Kingdom of Saudi Arabia will apply liberally existing charterworthiness rules for charters .

(4) Each Contracting Party shall extend positive consideration to applications by airlines of the other Contracting Party to carry charter traffic not covered by this Annex on the basis of comity and reciprocity . (5) The provisions of this Annex will expire on March 31, 1995 . The Contracting Parties agree to exchange views at least six months in advance of the expiration date to determine whether the provisions of the Annex should be continued or modified . (6) This Annex does not modify any other provision of theAgreement regarding consultations, suspension, or termination of the Agreement . W7

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